Brad, I have heard about it for a while.
There are claims that some big companies in the market are reporting their competitors, or buying links to them in other sites and reporting it.
Here is what Matt Cutts from google has to say about it:
“these reports aren’t being fed directly into algorithms, and are being used as the starting point rather than being used directly”
Also, “individual links can be discounted and sellers can lose their ability to pass on PageRank/anchortext/etc., which doesn’t allow site A to hurt site B”
You can read a detailed discussion about this theme here: Matt Cutts about paid links
Hope it helped.